CASE NO.: Appeal (civil) 3696 of 2007 PETITIONER: Asian Thermal Insulation (I) P. Ltd RESPONDENT: Bridge & Roof Co. (I) Ltd DATE OF JUDGMENT: 13/08/2007 BENCH: Dr. ARIJIT PASAYAT & C.K. THAKKER & LOKESHWAR SINGH PANTA JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 3696 OF 2007
(Arising out of SLP (C) No. 49 of 2006)
Dr. ARIJIT PASAYAT, J.
1. Leave granted.
2. Controversy lies within a very narrow compass.
3. The factual background as projected by the appellant is
as follows:
On 22.12.2003 work order was issued by the respondent
to the appellant. There was a clause for arbitration in the
agreement which was to the following effect:
“41. ARBITRATION
B&R confidently feel that there shall not
arise any disputes or differences during
execution and completion of this order by
the Contractor.
However, in the event of any
disputes or differences arise between
Company (B&R) and Contractor
(hereinafter called the said parties)
touching or concerning the interpretation
of the terms and conditions as
performance of the order or in connection
therewith or the rights and liabilities of
either of the said parties hereto, the said
parties shall endeavour to settle the same
amicably through mutual agreement
between them, but if the mutual
settlement is not possible between the
Company and the Contractor, the
provisions of the Indian Arbitration &
Conciliation Act, 1996 and all statutory
re-enactment and modifications thereof
and the rules made thereunder shall
apply to such arbitrations.”
4. On 27.11.2004 a notice of demand was sent to the site of
the respondent and it was returned with the postal
endorsement “refused”. On 30.6.2005 the request was
reiterated. On 9.8.2005 an order was passed by the High
Court on the application filed by the respondent. The matter
was directed to be placed before the Chief Justice of the High
Court for naming an arbitrator. On 19.9.2005 the High Court
refused to recall its order dated 9.8.2005 on the appellant’s
petition. On 26.10.2005, this Court in SBP & Co. v. Patel
Engineering Ltd. & Anr. [2005 (8) SCC 618] has dealt with the
nature of power exercised by the Chief Justice of High Court
or Chief Justice of India, as the case may be, under the
Arbitration and Conciliation Act, 1996 (in short the
‘Arbitration Act’) and held that same is a judicial power and
not an administrative power. The decision in Konkan Rly.
Corpn. Ltd. v. Rani Construction (P) Ltd. (2002 (2) SCC 388)
was overruled in SBP & Co. (supra). The conclusions per
majority were as follows:
“47. We, therefore, sum up our conclusions as
follows:
(i) The power exercised by the Chief Justice
of the High Court or the Chief Justice of
India under Section 11(6) of the Act is not
an administrative power. It is a judicial
power.
(ii) The power under Section 11(6) of the Act,
in its entirety, could be delegated, by the
Chief Justice of the High Court only to
another Judge of that Court and by the
Chief Justice of India to another Judge of
the Supreme Court.
(iii) In case of designation of a Judge of the
High Court or of the Supreme Court, the
power that is exercised by the designated
Judge would be that of the Chief Justice
as conferred by the statute.
(iv) The Chief Justice or the designated Judge
will have the right to decide the
preliminary aspects as indicated in the
earlier part of this judgment. These will
be his own jurisdiction to entertain the
request, the existence of a valid
arbitration agreement, the existence or
otherwise of a live claim, the existence of
the condition for the exercise of his power
and on the qualifications of the arbitrator
or arbitrators. The Chief Justice or the
designated Judge would be entitled to
seek the opinion of an institution in the
matter of nominating an arbitrator
qualified in terms of Section 11(8) of the
Act if the need arises but the order
appointing the arbitrator could only be
that of the Chief Justice or the designated
Judge.
(v) Designation of a District Judge as the
authority under Section 11(6) of the Act
by the Chief Justice of the High Court is
not warranted on the scheme of the Act.
(vi) Once the matter reaches the Arbitral
Tribunal or the sole arbitrator, the High
Court would not interfere with the orders
passed by the arbitrator or the Arbitral
Tribunal during the course of the
arbitration proceedings and the parties
could approach the Court only in terms of
Section 37 of the Act or in terms of
Section 34 of the Act.
(vii) Since an order passed by the Chief
Justice of the High Court or by the
designated Judge of that Court is a
judicial order, an appeal will lie against
that order only under Article 136 of the
Constitution to the Supreme Court.
(viii) There can be no appeal against an order
of the Chief Justice of India or a Judge of
the Supreme Court designated by him
while entertaining an application under
Section 11(6) of the Act.
(ix) In a case where an Arbitral Tribunal has
been constituted by the parties without
having recourse to Section 11(6) of the
Act, the Arbitral Tribunal will have the
jurisdiction to decide all matters as
contemplated by Section 16 of the Act.
(x) Since all were guided by the decision of
this Court in Konkan Rly. Corpn. Ltd. v.
Rani Construction (P) Ltd. and orders
under Section 11(6) of the Act have been
made based on the position adopted in
that decision, we clarify that
appointments of arbitrators or Arbitral
Tribunals thus far made, are to be
treated as valid, all objections being left
to be decided under Section 16 of the
Act. As and from this date, the position
as adopted in this judgment will govern
even pending applications under Section
11(6) of the Act.
(xi) Where District Judges had been
designated by the Chief Justice of the
High Court under Section 11(6) of the
Act, the appointment orders thus far
made by them will be treated as valid; but
applications if any pending before them
as on this date will stand transferred, to
be dealt with by the Chief Justice of the
High Court concerned or a Judge of that
Court designated by the Chief Justice.
(xii) The decision in Konkan Rly. Corpn. Ltd.
v. Rani construction (P) Ltd. is overruled”.
5. Though arguments were advanced in support of the
respective stand about the legality of the impugned order, it
was agreed to by learned counsel for the parties that following
arrangement can be made.
“The appellant has nominated one Sri J.
Chawla to be its arbitrator. Within a period of
30 days the respondent shall nominate its
arbitrator. Thereafter the Chief Justice of the
High Court shall nominate the Presiding
Arbitrator who shall be a retired Judge of any
High Court.”
7. Appeal is accordingly disposed of with no order as to
costs.